Are You SBIR Ready?

  • January 14, 2021

Small Business Innovation Research (SBIR) opportunities presented by 11 federal agencies are one of the largest non-equity based grant awards a small business can apply for. What is even better is that these opportunities are available annually, biannually, or in the case of the National Science Foundation (NSF) on a rolling basis. There is no question SBIR is a great opportunity, but what businesses should be considering before they apply is whether or not their business is SBIR ready. Some small businesses get so excited about these opportunities they apply before they are truly ready. Unfortunately, the reviewers can see that the businesses are not ready and reject the proposal. As painstaking as waiting may be, it is best to wait until your business is truly ready to enter the SBIR competition. But what does ready look like?

What is SBIR Looking For?

SBIR programs are looking for something very specific. They want an early-stage company, but they want that company to have a product in mind for development or have done initial proof of concept testing on their idea or project. They want a business that is new enough to have a high-risk, unproven idea for innovation, but developed enough to have discovered a customer base, examined marketability, designed product mockups, and have a sound business plan in place. This may sound like a difficult balance to strike, but the trick is to plan ahead for throwing your hat in the ring for SBIR in the very early stages of your business. This anticipation and goal setting will allow you to be SBIR ready at the proper time in regards to your business growth.

The Specifics

This rubric from Coplex is a great point of reference for readiness at various stages of growth.

Generally speaking, to be at a stage where your business is considered ready for SBIR your responses should fall mostly in the score categories for 2 and 3. This means there are several things SBIR ready businesses need.

The Checklist

  • Mentors and Advisors: At the very least they should be in place, but ideally you will have the ongoing support and input of an advisory team.
  • Revenue and Growth: While it is ideal to have generated at least some revenue as a business prior to applying, it is ok to apply for SBIR at a pre-revenue stage. At the very least, however, SBIR ready businesses must have done some customer discovery and identified the target market and why they will be interested in this project.
  • Business Model: While you do not need to have a lengthy, 20-page business plan, you should at least be able to answer the following questions to create a Lean Canvas plan. This includes Problem, Solution, Key Metrics, Unique Value Proposition, Unfair Advantage, Channels, Customer Segment, Cost Structure, and Revenue Streams. If you can not explain one or more of these key points of the Lean Canvas, your business is not at a stage to be pursuing SBIR.
  • Legal, Accounting, HR, Insurance: You should be a legal entity with a tax ID and DUNS number. SBIR is for small business concerns, not concepts.
  • Technology: Ideally, you have a minimum viable product (MVP) but you must at least have a named product, marketing plan, and website.
  • Product Market Fit: You should have a tested problem and tested solution to that problem by the time you apply for SBIR, even if the solution was arrived at via research and previously published literature to support a hypothesis.
  • Unit Economics: At the very least, SBIR-ready businesses will have a sampling of acquisition costs from market testing.
  • Fundraising and Finance: Companies should have at least completed pre-seed fundraising at the time of application.
  • Market Size and Potential: An analysis of the market should have taken place in full by this point. Companies should have researched and understand their TAM, SAM, and SOM and be very familiar with their initial market segments.
  • Pitch: The small business should have some sort of pitch deck and an idea for how to pitch this product to funding sources both private and federal.

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